Quote:
Originally Posted by RickFLM4
Sorry to hear about your father in law.
My wife and I looked into long term care insurance a few years back. There are different types of plans and costs, ranging from those similar to term life, to some with benefits if you die before using benefits (either cash of combining with spouse's benefit for them to use), as pointed out above. Some have monthly premium payments and some have lump sum upfront premiums. The premiums themselves are all over the board and when / how they kick in also varies. It is important to understand this aspect because home healthcare is important and you want to be able to access whatever you need when you need it, not just a limited schedule of allowable expenses.
There are a couple of things they all have in common through:
1. Acceptance is not guaranteed and an existing condition can send premiums up significantly. When I mentioned my wife's bad knee to the agent (which they would have found out about anyway because they review all medical records), he said that's the kind of thing that could scare away some insurers and / or send premiums skyrocketing.
2. The benefits are generally capped in dollars (also as indicated in a post above) and in this regard, they are more like life insurance than health insurance. So, it's really a risk/reward and investment return play. The lowest premiums apply to "use it or lose it" policies where you lose the premiums if you cancel or never use the benefit (e.g., die before using the benefit). If you take those off the table and just examine the policies where you either use a benefit or a beneficiary receives something back if you don't, examine whether the return (benefits / beneficiary payment) are sufficient relative to the investment (premium). You might find you are better off self-funding savings, which may require higher savings to provide the same level of "benefit" vs. paying premiums, but pays 100% of the investment to a beneficiary if never used and eliminates the risk of needing to haggle with an insurer over benefits or having an insurer go belly up.
Like a lot of insurance and warranty products, it is really about peace of mind. For us, the cost / benefit didn't work for the peace of mind we would seek from such a product. But that doesn't mean it doesn't make sense for a lot of other people, especially if you look into it in your 40's / before any health issues give insurers a reason to give you less than preferred rates.
It is very difficult to efficiently plan for late life because there are so many unknowns.
|
^excellent^
Self insurance (no LTC) is the lowest expected (average) cost scenario. In other words, buying LTC insurance costs more over a lifetime than not having LTC insurance.
It is speculation to forecast or predict whether one’s care needs will be more or less than average. All insurance (and warranties, thanks for including this comparison) accrue more financial benefit to the issuer than to the beneficiary. Otherwise there would be no insurance industry. Let’s not forget the conditions, or hoops to jump through, before receiving payment from the LTC carrier.
In the end, it’s a choice of how much peace of mind do you want to buy?